Apr 13, 2018

How Airbnb Is Killing New Orleans' Neighborhood Restaurants

Even in a city devoted to and dependent on tourism like New Orleans, the impact Airbnb has on business and employment, let alone housing affordability, is a concern. JL

Monica Burton reports in Eater:

“You can’t have neighborhood restaurants without neighborhoods.” Short-term rentals are pushing out residents, including
restaurant and bar staff.
In Marigny, 12.7% of people work in food service; in Bywater it’s 16%; if rents rise due to gentrification, workers need to relocate. Staffing
has long been a problem in the restaurant industry. “Next thing you know you’re talking about less densely
populated neighborhoods with less service,”

Only weeks ago, it was Mardi Gras in New Orleans, and as purple, green, and gold strings of beads blanketed the city, so did the tourists. Last year, 1.2 million people attended the annual festivities, three times the city’s population, although inclement weather led to a smaller turnout this year. Increasingly, New Orleans is a travel destination even when it’s not hosting a festival. The city is the No. 1 place to visit in 2018, according to the New York Times’s annual list of 52 places to go. In 2016, it was host to a record 10.45 million visitors, who spent an additional 12 percent on the city’s famous restaurant scene than the previous year.

The birthplace of jazz is a destination for bachelor and bachelorette parties, musicians, and food lovers; hospitality is a significant driver of New Orleans’s economy. But, in recent years, residents and business owners have begun to complain about one aspect of the thriving hospitality sector: Airbnb. And although tourism tends to be good for the restaurant business, according to some locals, Airbnb might not be.

“You can’t have neighborhood restaurants without neighborhoods,” New Orleans restaurateur Neal Bodenheimer says. It’s a problem he ran into with his Bywater restaurant Cafe Henri, which closed in 2017. The co-owner of essential New Orleans cocktail bar Cure and French Quarter restaurant Cane & Table says he’s “not trying to blame our failure on anybody but ourselves... [but] with us having depleted our cash reserves pretty thoroughly, we had to say. ‘Is this neighborhood going in the wrong direction?’”

Unsurprisingly, Airbnb views its presence in cities as a boon for restaurants. The company invested in reservation app Resy in September 2017. And just this month, Airbnb announced it would be adding a “Restaurants” tab to its site, allowing users to book restaurant reservations through Airbnb. A 2017 report from the company titled “Airbnb: Generating $6.5 billion for restaurants worldwide” details how Airbnb benefited the restaurant industry, by the numbers. Airbnb reports that ​guests ​spent ​nearly ​$2.7 ​billion ​in ​the restaurant ​industry during trips to 29 cities in the U.S., Canada, and Latin America, around a $1 billion increase from the previous year. In New Orleans, Airbnb says its guests spent $30 million more on the restaurant industry between September 2016 and September 2017 than in previous years.

Long-term New Orleans residents have characterized the spread of Airbnb and other short-term rentals as gentrification — and it’s not the only city to note adverse effects. A 2018 study from a McGill University School of Urban Planning research group found that Airbnb contributed to median rent increases in New York City by replacing long-term housing with short-term housing. (Airbnb refuted this claim.) In Florence, Italy, a heavily touristed city similar in size to New Orleans, residents in the historic city center are being pushed out in favor of short-term renters. Some locals charge Airbnb with accelerating the “Disneyfication” of the city. In Charleston, South Carolina, residents have formed a Short-Term Rental Task Force to avoid a similar fate.

Cafe Henri, a Bywater restaurant that closed last summer, in part due to the changing neighborhood. Josh Basted/Eater NOLA

As Airbnb grows, locals in cities here and abroad are feeling its influences. But in New Orleans, where tourists can outnumber residents 25 to one during the busiest seasons, the repercussions of short-term rentals on the city — its residents and businesses — reached an apex.

In December 2016, the city of New Orleans issued ordinances to regulate short-term rentals with permitting and zoning rules. The new regulations created a clear pathway for landlords to legally allow short-term rentals, and since the ordinances went into effect March 2017, the department has issued over 4,000 short-term rental licenses. “Our goal was to put in a set of standards that were workable, that could be enforced,” says department director Jared Munster. “We made it a low-barrier-to-entry process because if we made it a high bar to jump over to get into into the licensing process, it would reduce our ability to get people into compliance.”

According to a collaborative investigation by the Lens and Huffington Post from October 2017, short-term rentals make up at least 3 percent of residential addresses in 15 different neighborhoods in the city. A New Orleans neighborhood impact study conducted by New Orleans-based LLC Research by the Numbers shows that 75 percent of Airbnbs in New Orleans are entire homes, meaning when a guest books a stay, a resident won’t be present.

New Orleans residents complained to the Huffington Post that short-term rentals have pushed locals out of neighborhoods by making them undesirable to long-term residents. In some instances, landlords, deciding they can make more money with short-term rentals, evict tenants.

Marigny and Bywater, neighborhoods characterized by colorful shotgun homes, popular music venues, and locally beloved restaurants like Bacchanal and the Country Club, are among those with the highest concentration of short-term rentals in the city. A ban on short-term rentals in the touristy, picturesque French Quarter makes these nearby neighborhoods particularly attractive to visitors and their residents — and some business owners are especially concerned about the proliferation of Airbnbs. In Marigny, there are 308 Airbnb listings, according to database Inside Airbnb, and in Bywater there are 205 listings.

In 2016, residents of Bywater, Marigny, and St. Roch held a “neighborhood parade” to protest whole-home short-term rentals in advance of a City Council vote on the matter. They feared that allowing short-term rentals would prompt landlords to force out long-term tenants. Some in attendance worried more Airbnbs would have an adverse effect on local businesses, with one parade attendee saying of Airbnb guests, “They’re not here to spend money. They’re here to save money.”

That same year, during the New Orleans Jazz & Heritage Festival, Vocativ reported that residents in Marigny posted protest signs on street posts directed at Airbnb guests. They read: Are you staying in an illegal short-term rental listed on AIRBNB or VRBO? If so, YOU are directly responsible for displacing the last remaining longtime neighborhood residents that are survivors of the largest disaster that’s ever happened in America by creating a market for illegal short-term rentals in this residential area. And that, dear tourist, is a GODDAMN SHAME. Enjoy your stay in our former homes, y’all!!!”

Airbnb, meanwhile, touted its role in generating $17 million for the city during the festival, with $5 million of that going to Airbnb hosts and the rest going to businesses and restaurants.

The Airbnb gentrification is connected to ongoing gentrification in these neighborhoods. A 2016 Department of Housing and Urban Development report revealed that many of New Orleans’s previously black neighborhoods, including Bywater, were majority white more than a decade after Hurricane Katrina.

When the character of a neighborhood changes, its restaurants are affected, too. Bodenheimer thinks that Cafe Henri, which he co-owned with Kirk Estopinal, also his partner at Cure and Cane & Table, closed in part because of the way short-term rentals changed the character of the Bywater neighborhood where it was located.

Bodenheimer and Estopinal opened Cafe Henri in July 2016 as a casual neighborhood restaurant. The goal was for everything on the menu to be under $16. But it soon became apparent that the affordable neighborhood spot wouldn’t succeed the way they had envisioned it. “You can have that kind of place if you have [a high] volume of the neighborhood coming through,” Bodenheimer says, “but ultimately that didn’t work because there wasn’t a dense enough population down there.”

Bodenheimer and Estopinal attempted to retool the restaurant at the beginning of 2016 to make it more exciting for visitors. They swapped classic cocktails for more inventive ones, upgraded the wine list, and brought in a new chef. But although sales picked up, shortly after after theTimes-Picayune published an article detailing these efforts, the restaurant closed.

“I’m not looking for a scapegoat,” Bodenheimer says. “I can tell you that as we turned the restaurant around, we looked and said, ‘Hey, what’s happening here?’”

In 2016, the annual Tales of the Cocktail conference advised its participants — largely a mix of local and out-of-town cocktail and spirits industry professionals — against booking short-term rentals and Airbnbs in New Orleans. In an open letter posted to the Tales of the Cocktail website, the organization called for conference attendees to “please avoid staying at an Airbnb or other short term rental property that is not legally sanctioned to operate in New Orleans.” The conference wanted its attendees to support hotels, which play a significant role in the hospitality industry Tales of the Cocktail aims to support.

“It’s not ‘poor hotels,’” Tales of the Cocktail marketing manager Jeremy JF Thompson, whose byline appears on the open letter, says. “It’s not the hotels. It’s all the people who work at the hotels, anyone who is benefiting from the gratuities.”

The letter quoted local bar manager Rhiannon Enlil, who says she was evicted from her apartment so that her landlord could rent it out to short-term visitors. “If you allow short-term rentals to eat away at that supply, the appeal to live and work in this city diminishes,” she said in the open letter. “All of the visitors who use short-term rentals, who want to eat in our restaurants, listen to our live music, drink in our bars... who will serve them if we in the service and entertainment industry cannot afford to live here?”

But Airbnb has undeniably benefited some in the Bywater — and there are neighborhood food businesses doing well in the wake of these changes.

Chaya Conrad says she wouldn’t have been able to open Bywater Bakery if not for Airbnb. She rents out a room in her home with the site, and the extra income generated from the service made starting a business possible. About a year after opening, Conrad says it’s locals — not tourists — who make up the bulk of her business, and it’s locals she aims to attract. “I’m not trying to recruit Airbnb business,” she says. “That happens naturally. The nature of Airbnb is that [the guests] go where the locals go.”

Conrad acknowledges that the issue is complicated. “It’s a hot topic right now and we [in this neighborhood] tend to find ourselves in the middle of it,” she says. “We straddle the fence on it. We can’t survive in a neighborhood that’s just Airbnb.” Other restaurateurs declined to comment on this story for fear of alienating customers.

“Who will serve the visitors if we in the service and entertainment industry cannot afford to live here?”

Munster says he’s heard anecdotal evidence on both sides of the debate: While some residents say short-term rentals are driving gentrification, others in the real estate industry say the regulations have led to price decreases. “What we hear by and large is that this is causing an infusion of tourism into neighborhoods that don’t generally see it,” he says. “So I don’t know if that necessarily means that there is more business or less business for an individual restaurant, but they’re certainly seeing a more varied crowd than they otherwise would have.”

Bodenheimer, though, feels the issue of Airbnb-led gentrification is an important one. As Tales of the Cocktail acknowledged with its open letter, the short-term rentals are pushing out residents, including restaurant and bar staff. “Even at Cure, the people that used to live Uptown now live in Mid City and live further and further out,” he says. In Marigny, 12.7 percent of people work in food service; in Bywater it’s nearly 16 percent; if rents rise due to continued gentrification, these workers might need to relocate.

Staffing has long been a problem in the restaurant industry, and Airbnb is surely not the sole contributor in New Orleans. But Bodenheimer worries that the absence of long-term residents in neighborhoods like Marigny and Bywater will adversely affect neighborhoods and, ultimately, all of New Orleans. “Next thing you know you’re talking about less densely populated neighborhoods with less service,” he says, imagining a future where short-term rentals go unchecked. “Over time it would start to compound to where people wouldn’t even want to visit New Orleans because it would feel like the soul of the city is gone.”

Bywater and Marigny are changing. Although residents were most vocal around the 2016 City Council vote, a more recent proposal for a hotel in Bywater raised similar concerns, namely that the neighborhood would become uninhabitable for its community of artists.

There are new neighborhood restaurants in development, too. Mariza, a local critical favorite, closed in December, although the decision was personal, not financial. In its place, Nina Compton, Top Chef star and acclaimed chef of Compère Lapin, one of America’s best restaurants, opened Bywater American Bistro. She told Eater her goal is to create a true neighborhood restaurant in the neighborhood she calls home.

“Having regulars that we can connect with is one of the most important things to me,” she says. But she isn’t worried that the high density of short-term rentals in the neighborhood will affect business. “I think restaurants will thrive here if they can deliver good food and beverage. People will travel if it is worth it. Hopefully after Bywater American Bistro opens, more restaurants will follow.”

With its star pedigree, it might be just the kind of neighborhood restaurant to succeed in a neighborhood comprised, at least in part, of out-of-town neighbors.

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As a Partner and Co-Founder of Predictiv and PredictivAsia, Jon specializes in management performance and organizational effectiveness for both domestic and international clients. He is an editor and author whose works include Invisible Advantage: How Intangilbles are Driving Business Performance.Learn more...